STATE EDUCATION DEPARTMENT / THE UNIVERSITY
OF THE STATE OF NEW YORK / ALBANY, NY 12234
The Honorable the Members of the Board of Regents
February 22, 2005
Enable the Board of Regents to review audits
The following materials are attached.
∑ Minutes of February Meeting (Attachment I)
∑ Audit Report Abstracts (Attachment II)
∑ Audit Reports
REGENTS SUBCOMMITTEE ON AUDITS
Date: March 15, 2005
Time: 8:00 Ė 9:00
Location: Regents Room
Last Revised 2/28/05
Review Agenda/Minutes (Attachment I)
Audit Report Abstracts (Attachment II)
Departmentís Monitoring of Federal Grants
Address Audit Findings
Subcommittee Members in Attendance:
Regent Geraldine D. Chapey, Chair
Regent Arnold B. Gardner, Vice Chair
Regent Joseph E. Bowman
Regent Chapey opened the meeting by welcoming everyone and reminding them of the important changes occurring in the accounting and auditing professions as the effects of Sarbanes-Oxley Act (Act) and similar initiatives trickle down into the public sector.
Staff responded to follow-up questions. A copy of a 1996 audit, "Annual Audits of School Districts and Related State Education Department Oversight" was provided to the members as requested. In response to a request for information on the Act, staff prepared a summary document for discussion.
The Subcommittee approved the minutes of the prior meeting.
Staff provided the members with a summary of
the key provisions of the Act. The provisions of the Act only apply to publicly
traded companies. However, some of the provisions are relevant to improved
accountability in the government and nonprofit sector. In fact, it was pointed
out that some key provisions in the Act already exist in other law, regulation,
or guidance and are applicable to USNY institutions. An example cited was
requiring auditor independence; this requirement already exists in government
auditing standards and is applicable to all New York State school district
audits. Another example cited was the need for a code of ethics. The Act
requires disclosure regarding the existence of a code of ethics. New York State
General Municipal Law currently requires school districts to adopt a code of
A discussion occurred regarding the
advisability of establishing some additional requirements for Certified Public
Accountants to comply with prior to conducting audits of school districts. Among
the possibilities discussed were required training or additional
Fiscal Analysis Activities for the Office of
Staff provided the members with a summary of
activities conducted by the Office of Audit Services (OAS) in support of the
Office of Higher Education (OHE).
Assistant Commissioner Frey described the activities, which include the
The presentation resulted in a discussion of
the proposed statewide master plan for higher education. The consensus of the
Subcommittee was that the master plan should include language that emphasizes
the importance of financial accountability over student financial aid programs,
as well as overall operations.
Staff was available to answer questions on the following audits:
The members asked staff to brief the
Subcommittee on the results of the Departmentís risk assessment when completed.
There was also a discussion of the proposed scope of the audits of IDEA
funds. That will also be discussed
at a future meeting.
Staff informed the members that OAS auditors
have begun visiting other VESID district offices as a follow-up to the
previously released internal audit. In addition, staff informed the members that
an official of the William Floyd School District has been arrested. A third issue described was the
investigation of the activities of an organization, Suffolk County Organization
for the Promotion of Education (SCOPE), which provides various services
including the staffing of superintendents, business officials, and other
personnel to school districts. The issues being examined are questionable
expenditures and possible violations of the State Retirement Law.
Regents Subcommittee on
of Audit Services
Hebrew Academy for Special Children for
the Year Ended
An audit conducted by Watson Rice LLP
Certified Public Accountants, for the Office of the Auditor General,
Department of Education of The City of New York and Approved by the State
Education Department Pursuant
to Education Law Section 4410
The audit found that the School had
overstated staff compensation in excess of regional medians by
$85,933. In addition, certain
vehicle expenses were reclassified as personal service prior to the
application of the regional median. These items resulted in a net salary
adjustment of $69,433.
The audit also found other adjustments related to undocumented
travel expenses and a duplicate travel reimbursement.
The audit also found that the preschool
program revenue was understated by $416,285 and units of service were not
reported for the special education itinerant teacher (SEIT) program. The
School over billed for SEIT services by $54,648.
The report contained 4 recom-mendations
related to internal control observations. The recommendations are to
maintain formal written policy and procedures concerning pur-chasing,
maintain travel logs, conduct periodic physical inventories, and
accurately summarize and review student attendance.
School officials agree with the
findings and recommendations and have taken action to implement the
The results of this audit will be used
to establish audited tuition rates.
New York State Federal Single
Conducted by KPMG
No specific recommendations, Corrective
action plans required
Department Officials agree with the
findings and have developed corrective action plans. Regarding the site
visit monitoring, Department Officials indicate that they have begun to
finalize a comprehensive monitoring plan that will include all programs
funded under NCLB.
of the State Comptroller
Westbury Union Free School District
For the Period July 1, 2002 through
10th Judicial District
The recommendations are to adhere to
employee contracts in providing benefits, ensure accurate employee
attendance records are maintained, establish the proper reporting
relationship for the internal claims auditor, and update the District's
conference guidelines. The report also recommends updating the travel
policy to prohibit the paying of personal expenses, monitor compliance
with policies on travel, conference expenses and meal reimbursements,
consider estab-lishing a maximum per diem travel reimbursement policy and
conduct a cost benefit analysis of the use of the cell phones.
District officials responded that it is
important to note that there was no finding of misappropriation of funds
or wrongdoing. Further, officials believe some of the observations
involved minor issues. District Officials have generally agreed with the
specific recommendations and have taken actions to implement. However they
continue to disagree with some of the conditions identified in the audit.
OSC comments to the District response
indicate that they disagree with the Districtís assertion of the
significance of the findings. They state that reimbursement beyond that
allowed by employee contracts as well as personal expenses is a serious
problem. The comments also indicate they do not believe the new policy on
conference prohibits the payment of non-employee expenses and billing of